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If Consumers Expect a Tax Cut to Be Temporary

Question 6

Multiple Choice

If consumers expect a tax cut to be temporary,


A) consumption remains unchanged.
B) the increase in consumption will be much larger than for a permanent tax cut.
C) the decrease in consumption will be much smaller than for a permanent tax cut.
D) the overall effects are much larger than for a permanent tax cut.
E) the increase in consumption will be much smaller than for a permanent tax cut.

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